LONDON -- As the United States wages a very public battle against Iran's quest for nuclear power, Washington, D.C., is quietly gaining ground on another energy front: The oilfields that are the Islamic Republic's lifeblood.

Iran's oil industry has raked in record amounts of cash during three years of high oil prices. But a new U.S. campaign to dry up financing for oil and natural gas development poses a threat to the republic's ability to continue exporting oil over the next two decades, many analysts say.

The campaign comes at a moment of unique vulnerability for Iran's oil industry, which also faces challenges from rising domestic energy consumption, international isolation, a populist spending spree by President Mahmoud Ahmadinejad and trouble closing contracts with foreign oil companies -- a recipe for potential disaster in a nation with one of the world's largest reservoirs of oil.

"If the government does not control the consumption of oil products in Iran, ... and at the same time, if the projects for increasing the capacity of the oil and protection of the oil wells will not happen, within 10 years, there will not be any oil for export," Muhammad Hadi Nejad-Hoseinian, Iran's deputy oil minister for international affairs, said in a telephone interview.

If Iran were suddenly to stop exporting its 2.4 million barrels of oil a day, such as in the event of a military strike, world oil prices probably would skyrocket. But a gradual decline probably could be offset by other OPEC members, analysts say, particularly as Iraq increases its oil production and Saudi Arabia carries out plans for significant increases in its production capacity.

The efforts by the U.S. and its allies over the past few months to persuade international banks and oil companies to pull out of Iran threaten dozens of oil and gas projects, including plans for development of Iran's two massive new oil fields that stand to expand oil output by 800,000 barrels a day over the next four years.

"Many European banks which had accepted financing some oil industries projects have recently canceled them," Nejad-Hoseinian said.

In addition, banks are no longer granting letters of credit for delivery of some supplies, ministry officials say. And as nations such as Japan begin to back out of Iran oil development under U.S. pressure, the government in Tehran is being forced to dig deeply into its own reserve funds to get crucial new projects off the ground.

But Nejad-Hoseinian said Iran has recognized the gravity of the threat and has launched steps to head it off, including new "smart" rationing cards scheduled for distribution in March to check skyrocketing sales of cheap gasoline and an overhaul of Iran's historically stingy contract terms in an attempt to lure big oil companies into skirting the U.S. roadblocks.

Iran also is hoping to turn to China and Russia for help. But U.S. officials have warned they will seek to hold China accountable under Washington, D.C.'s unilateral sanctions laws if it proceeds with a $16-billion project to develop Iran's North Pars gas field. China also has signed a memorandum of understanding under which it may take on development of the Yadavaran field in southwest Iran, expected to boost production by 300,000 barrels a day.

Iran's oil and natural-gas dilemma has no direct connection to the sanctions adopted by the U.N. Security Council last month, which are tightly targeted at assistance to Iran's nuclear program. Although Tehran insists it has strictly peaceful intentions, the U.S. and other countries believe the program is linked to development of nuclear weapons.

Rather, the looming crisis stems from a series of domestic problems that have converged at a time when Iran is susceptible to U.S. attempts to capitalize on them to coerce Iran's compliance on the nuclear issue.

First is the condition of Iran's aging oilfields, which have not recovered fully from damage inflicted during the Iran-Iraq war of the 1980s. To maintain enough pressure to keep them pumping at all, Iran must divert large amounts of natural gas that might otherwise be sold.

"You need billions of dollars invested in order to stand still -- to avoid a decline," said Manouchehr Takin, a former Iranian oil geologist who is now a senior analyst with the Centre for Global Energy Studies in London.

Likewise, new refinery construction is being overwhelmed by the swelling number of young Iranians and their fondness for gas-guzzling cars. Heavily subsidized gasoline is just 35 cents a gallon, a price that invites huge amounts of smuggling, and years of talk about raising the price have, until recently, gone nowhere.

Moreover, the country has one of the most extensive residential heating infrastructures in the world, with homes in the most remote villages warmed toastily with inexpensive natural gas. Total domestic energy subsidies cost $20 billion to $30 billion a year, Takin said.

"These subsidies are now costing the government roughly 15 percent of Iran's GDP. That should knock you over. That's a mind-boggling number," said Hossein Askari, professor of international business at George Washington University. "And the nub of the problem is that if you were to cut the subsidies, I think there would be riots in the streets."

Iran could be reinvesting in the oil and gas infrastructure and rapidly built new refineries, and it is to a degree, but Ahmadinejad has diverted billions of dollars in oil revenues for social welfare programs, to major infrastructure building programs in neighboring countries such as Afghanistan, and to importing consumer products -- to the consternation of many people in his government.

To a great degree Iran has created its own woes by dragging out contract negotiations and offering only skimpy paybacks to foreign oil companies interested in building new production, industry analysts say.

For years, U.S. sanctions prohibited investments of more than $20 million in Iran's oil industry, but in practice, they were applied only to U.S.-based oil companies. But as the nuclear showdown has unfolded, and as it became clear the U.N. sanctions would not impose serious economic penalties on Iran, Bush administration officials decided on a different tack.

Envoys from the Treasury Department over the past few months have approached international banks and companies, reminding them of Iran's record of financing militant Islamic organizations such as Hamas and Hezbollah through the banking system, its defiance of United Nations resolutions on nonproliferation, and warning that investing in such a country might not be a good business risk.

Simultaneously, the U.S. Justice Department reportedly has opened investigations against several banks to determine whether investments in Iran violated U.S. sanctions laws. In late 2005, Dutch bank ABN Amro agreed to pay $80 million in fines stemming in part from improper transactions with Iran through its subsidiary in Dubai.

UBS Bank and Credit Suisse of Switzerland recently announced they were suspending most new business with Iran, and British-based HSBC said it no longer will accept dollar transactions from within Iran.

More than two decades of previous U.S. sanctions have had little effect on Iran's oil industry -- U.S.-based companies have been replaced, largely by Europeans. But this new attack on financing has started to dry up potential loans on dozens of projects, according to oil industry insiders in Tehran and the West.

One of them is reportedly the giant Azadegan oil field in southwestern Iran near the Iraqi border. Japan's INPEX Holdings Inc. pulled out of all but a 10 percent stake in the $2-billion project under U.S. pressure in October, and alternative financing from foreign banks has failed to materialize, said one source with close connections to the Iranian Oil Ministry.

"It has been very effective. Nobody is prepared to loan Iran anything on anything," said Fereidun Farashaki, an energy adviser to the Iranian prime minister in the 1970s who now heads the FACTS Inc. petroleum consulting company in Honolulu.

In a report published this month by the National Academy of Sciences, Johns Hopkins University geography professor Roger Stern argued that the confluence of high domestic demand, delay in adding new production capacity, diversion of natural gas to keep wells pumping and other factors could lead to a decline of 33 percent to 46 percent in exports by 2011 and a halt to exports by 2015 or so.

Other analysts have said those forecasts are too dismal, and output is more likely to remain flat at about 4 million barrels a day. Iranian officials say they have signed $28.4 billion worth of new oil and gas development contracts over the past 15 months, and hope to increase production to 7 million barrels a day by 2014 -- a goal that the International Energy Agency says will require $80 billion in investments.

Whether that will be realized or not depends, in large part, on what happens on the nuclear issue.

In fact, Iran's oil and gas dilemma appears to point up a "genuine" need for civilian nuclear power, Stern said.

"When I first started hearing this claim that Iran needed these nuclear plans to substitute for oil and gas, I thought, 'That's ridiculous,' " he said. "So it has really been a surprise to me that with the information, it hasn't been hard to demolish the proposition that this nuclear reactor need is simply a weapons deception.

"I don't think they're nice guys," he said. "This is a regime that funds terrorism and is making outrageous claims that Israel should disappear. But it just happens to be a convenient truth for them that they do need nuclear power."